SUNS 4352 Wednesday 13 January 1999

Rio de Janeiro, Jan 11 (IPS) -- Brazil's export revenues from coffee totalled $2.328 billion last year, with sales of 16.58 million 60-kg sacks, according to the latest report by the Brazilian Association of
Coffee Exporters (Abecafe).

But while the volume exported was 14.5 percent up from 1997, and the highest level seen since 1992, revenues fell 15.2 percent. The $2.745 billion in revenues made 1997 the best year for Brazilian exporters since 1984, thanks to the high average price of $190 per sack. Last year, the average price dropped to $140, following a collapse in the second half of the year.

The major rise in the exports of Brazil, the world's leading producer and exporter, triggered a global downward trend in prices. But the governmental Brazilian Company of Agricultural Research projects a coming harvest of around 23 million sacks, a return to the low yields seen from 1994 to 1997 due to the frost and drought that hit central-southern Brazil in 1994.

Last year, exports rose sharply in the second half, while prices plunged. From January to June, Brazil exported an average of only 930,000 sacks, at 186.20 dollars each. But in July to December, the volume of sales nearly doubled to 1.8 million sacks, which fetched an average price of only 119.35 dollars each.

Due to the damages caused by Hurricane Mitch, which destroyed coffee plantations in Central America, Brazil expected its exports to rise in November and December. International demand contracted, however, due to the rise in prices seen in October and November. Brazilian producers
held onto their coffee, waiting for better prices, after refinancing their debt with the government, which resolved their immediate financial troubles.

Brazil's coffee production, decisive in the world market as it accounts for nearly one-third of exports, remains unstable, in spite of the shift of production to areas with better growing conditions and other
measures designed to make production more stable and boost quality.

Since the heavy frosts of the 1970s, coffee-growing fell off sharply in the south and in the southeastern state of Sao Paulo, where crops are vulnerable to low temperatures. Production became concentrated in the eastern state of Minas Gerais, which has been one of the biggest coffee producers in the country since last decade.

In Minas Gerais, coffee is grown in semi-arid areas where the soil is of low fertility, but where good quality is obtained due to low humidity during harvest time. The land in the area is flat, which
enables mechanisation, and crops are safe from frost. Minas Gerais currently produces four million sacks, close to the yield of the central-eastern state of Espiritu Santo, which specialises in
"conillon" coffee, Brazil's robust brand.

Coffee plantations have cropped up as far north as Bahia in the northeast, where irrigation techniques have been used in semi-arid areas.

After a period of deregulation, since 1990, with the demise of the state-run Brazilian Coffee Institute, which imposed its guidelines and orientation, the government and private sector decided to join together in the Deliberative Council on Coffee Policy to promote the orderly
development of production and exports.

A few years ago, the coffee-roasting industry launched a successful programme designed to upgrade quality and bolster domestic consumption, currently estimated at 12 million 60-kg sacks. The target was to push consumption up to 15 million sacks by the year 2000, but that goal seems increasingly remote given the current financial crisis in Brazil.